Cynical Shift in Hardest Hit Foreclosure Fund

New Orleans We have now gone past tearing out our hair in frustration and are moving to full throated screams for help, but nothing seems to be putting a dent in the hapless and incompetent fiction that we have a national foreclosure modification program.  Recently the Obama Administration announced that it was moving another couple of billion from the unspent TARP funds that were supposed to be securing modifications over to the Treasury Department’s Hardest Hit fund that is supposed to be helping homeowners hold on to their houses when they are unemployed.

Despite any other pretense, all this really does is move money to the states to try and push money to jobless to subsidize mortgage payments, which means subsidize banks, for a little while until a miracle happens (someone gets a job and can start paying) or the bank forecloses anyway.  Since Treasury is unable or unwilling to push the banks to actually implement the modification program, the TARP money to support the modifications is simply sitting there, while millions face foreclosure.   In this cynical funds transfer absolutely nothing is changing to make the foreclosure modification program more effective, so this is really just a way of allowing the White House to play politics by shifting some money to states and getting the thanks from some governors and Congresspeople, taking some heat off of them as we move to midterm elections.

The facts are still stark:

  • Less than 400,000 so-called modifications for the 6,000,000 homeowners facing foreclosure.
  • Less $321 million spent of over $30 billion authorized from TARP for the foreclosure modification program (yes, that’s hardly more than 1% of the money allocated (see above!).

Statehouses and Washington are claiming this funds transfer will help hundreds of thousands of people facing foreclosure.  Let’s hope so, but if it does, it will only help a small percentage of people for a small amount of time as the seemingly unstoppable foreclosure machinery continues to grind forward with nothing but words from the government in the way of the banks.

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Principal Reduction Versus Arrogant Banks

JAMIE-DIMON-largeNew Orleans From the day the latest foreclosure modification plan as announced several weeks ago, and it became clear that banks saw their participation as voluntary, I said this was not going to work. The government orchestrated immediate acceptance by their subsidiaries, Citi and Bank of America, but as surely as I predicted that was just the spin. In hearings before Barney Frank’s House Financial Services Committee yesterday executives from ungrateful, anti-family institutions, JP Morgan Chase and Wells Fargo, earned their pay walking the plank to whisper that “on, no, not me, bro!” when asked to endorse a broad – and necessary – program of principal reductions to keep homeowners from losing their homes.

This would be simply more bad news for the millions of owners who are taking water trying to stave off foreclosure and the other millions who are already under water on the value of the home, if it had not been so predictable that most probably didn’t expect much from this program anyway. Remember the details of the program were also crafted so narrowly that rich people would already be in heaven before a working man could crawl through the eye of the needle to get foreclosure relief. In fact I take that back, since in the last Obama modification program you had to prove that you were not in fact a working man, but could show a valid unemployment debit card.

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